Big Bank Approval Rates for Small Business Loans Drop, According to October 2014 Biz2Credit Small Business Lending IndexsuperscriptstartTMsuperscruptend

Overall small business health improves at the one year anniversary of the government shutdown despite setback month in small business lending

Small business loan approval rates at big banks dropped for the first time in seven months, according to the October 2014 Biz2Credit Small Business Lending Index, a monthly analysis of 1,000 loan applications on Biz2Credit.com. Small business loan approval rates at big banks ($10 billion+ in assets) dipped to 20.4% in October from 20.6% in September.

Big Banks

Big Banks

Small business loan approval rates at big banks ($10 billion+ in assets) dipped to 20.4% in October from 20.6% in September.

Aug 2018
26.5%
Sep 2018
26.7%

Monthly Comparison

Aug 2018
26.5%
Sep 2018
26.7%

Yearly Comparison

"Big banks have demonstrated their commitment to small business owners over the last year".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Economy

"Lending approval rates at big banks are up nearly 20 percent in comparison to pre-government shutdown numbers as the economy continues its slow but steady rebound. With the improving economy, entrepreneurs have shown willingness to invest in their firms this year more than any other year since the Great Recession of 2009-11"."Big banks long had the advantage of a vast distribution network, the branches, which are now fading away". "Also, immigrants not as impacted by the brand names of big banks".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Small Banks

Small Banks

The percentage of loans granted by small banks slipped for the fifth consecutive month to 50.2% from 50.3% last month. However, a year-to-year comparison shows that small business lending approval rates are still significantly higher at big banks, while remaining almost stagnant at small banks over the past 12 months.

Jul 2018
49.7%
Aug 2018
49.8%

Monthly Comparison

Aug 2017
49%
Aug 2018
49.8%

Yearly Comparison

"Some smaller banks are paying the price for being slow to accept online applications"."The increased competition from big banks and institutional lenders are hurting them because higher quality borrowers are going to these competitors instead of small banks."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Institutional lenders

Institutional lenders

Meanwhile, institutional lenders granted 59.7% of the funding requests they received in October, a slight increase from 59.5% in September. Lending approval rates by these institutional lenders has increased every month since Biz2Credit began monitoring this category of lenders after their post-government shutdown emergence in January 2014.

Jul 2018
64.8%
Aug 2018
64.9%

Monthly Comparison

Jul 2018
63.9%
Aug 2018
64.9%

Yearly Comparison

"Small business lending is becoming mainstream among institutional players, who are offering more long-term products. These lenders are providing strong competition to big banks and look to be a long-term threat for big banks in the small business lending space".

Rohit Arora

Rohit Arora, Biz2Credit CEO

Alternative lenders

Alternative lenders

At the same time, approval rates at alternative lenders ahrefstart-- merchant cash advanceahrefend companies, factors, and other non-bank institutions -- slipped for the ninth consecutive month to 62.1% in October, from 62.6% in September.

Jul 2018
56.5%
Aug 2018
56.6%

Monthly Comparison

Aug 2017
57.1%
Aug 2018
56.6%

Yearly Comparison

"Institutional lenders have capitalized on the decreasing demand of short-term loans, which often came at a high cost and were granted by alternative lenders."

Rohit Arora

Rohit Arora, Biz2Credit CEO

Credit unions

Credit unions

Credit unions granted 43.5% of loan applications in October, a slight rise over the approval rate of 43.4% last month. However, a year-to-year comparison shows that lending approval rates at credit unions are down as they continue to be an afterthought by small business loan applicants.

Jul 2018
40.3%
Aug 2018
40.2%

Monthly Comparison

Aug 2017
40.3%
Aug 2018
40.2%

Yearly Comparison

View Past Months

Access Archives

Aug 2019

Small Business Loan Approvals at Banks Continue to Reach New Heights, According to August 2019 Biz2Credit Small Business Lending Index™

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July 2019

Small Business Loan Approvals at Banks Hit Record Highs, According to July 2019 Biz2Credit Small Business Lending IndexTM

Alternative Lending Drops and Credit Unions Sink to a Record Low

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June 2019

Small Business Loan Approvals at Big Banks Hit Record Highs, According to June 2019 Biz2Credit Small Business Lending IndexTM

Big Banks, Regional and Community Banks, and Institutional Lenders Climb, While Alternative Lending Drops and Credit Unions Sink to New Low

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May 2019

Small Business Loan Approvals at Big Banks Stay at Record Post-Recession High, According to May 2019 Biz2Credit Small Business Lending IndexTM

Small Banks and Institutional Lenders Climb, Credit Union Lending Remains at Post-Recession Low, Alternative Lending Stalls Again

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About Biz2Credit Small Business Lending IndexTM

The Biz2Credit Small Business Lending IndexTM is an analysis of 1,000 monthly loan applications on the Biz2Credit website. The Index reports the loan approval rates of small business financing requests at Big Banks ($10 billion+ in assets), local and regional banks and non-bank lenders (credit unions, Community Development Financial Institutions (CDFI), micro lenders, and others).

Unlike other surveys, the results are based on primary data submitted by more than 1,000 entrepreneurs who applied for funding on Biz2Credit's online lending platform, which connects small business borrowers with sources of capital.

Results of the Biz2Credit Small Business Lending IndexTM have been reported by The Wall Street Journal, Bloomberg BusinessWeek, Entrepreneur.com, Bloomberg Radio's "The Hays Advantage", SBA Radio, NY Daily News, Crain's NY Business, Michigan Banker, and other media.